China extends pilot free trade zones to strategic border regions

China will establish new pilot free trade zones (FTZs) in six provinces across the country, extending strategic trials to border regions to help improve trade ties with neighbouring countries and expand the reach of the Belt and Road Initiative.

The move, announced on Monday, also adds free trade zones in underdeveloped provinces, making them more attractive to high quality manufacturing in a bid to support their local economies and help weather the impact from the escalating trade war with the United States.

The six new FTZs are located in the landlocked province in Yunnan in the southwest; Heilongjiang, the northeastern-most province of China’s rust belt; the southern autonomous region Guangxi and the coastal provinces of Shandong, Jiangsu and Hebei.

In the south, Yunnan province borders Vietnam, Laos and Myanmar; while Guangxi also borders Vietnam. In the north of the country, Heilongjiang borders Russia. In addition, Shandong to the east is one of China’s major gateways for trade and investment flows with South Korea and Japan.

“The FTZs will tap into respective geographical advantages to deepen trade and economic cooperation with neighbouring countries and regions,” Chinese Vice-Minister of Commerce Wang Shouwen said at a press conference on Monday.

“The arrangement will not only help to optimise the strategic distribution of pilot FTZs, but also serve major national strategies such as the Belt and Road Initiative,” he said.

The announcement followed last Friday’s dramatic escalation of the US-China trade war, with both countries increasing tariffs and reinforcing concerns of a decoupling of the world’s two largest economies and the rising risks of global recession.

US trade tariffs had already forced many factories to relocate from the Chinese mainland to other countries in Southeast Asia, and boosted trade relations between Beijing and Moscow on energy and agriculture.